Shares of Dixie Group Inc. jumped 33% on Thursday after the Dalton, Georgia-based floorcovering manufacturer reported gains in profits, residential carpet sales and debt reduction.
Despite a 41% drop in commercial carpet sales from a year ago, the Dixie Group said it earned $906,000, or 6 cents per share, from continuing operations in the three months ended Sept. 30. In the same period a year ago, Dixie lost nearly $2.6 million, or 16 cents per share.
In response to the earnings gains, Dixie’s stock price rose 33 cents per share to close at $1.32 per share – the highest stock price for the company since February before the coronavirus pushed sales and shares down this spring.
Dixie profits improved even though overall company sales fell 10% from $95.4 million in the third quarter of 2019 to $85.9 million in the third quarter of this year.
Dixie said the debt restructuring plan announced last week helped shore up the company’s balance sheet, which has been aided by the reduction of $50 million in debt over the past 12 months.
Company directors also approved the repurchase of up to $2.9 million of the Company’s common stock, the company announced Thursday.
“We believe these transactions, together with significant operational improvements, put the Company in a much stronger position going forward,” Dixie CEO Dan Frierson said in the earnings report for the third quarter. “We are still assessing the long-term impacts of the COVID-19 crisis on our markets and operating practices. We are encouraged by the improvement we have seen in sales, but as a resurgence of COVID-19 cases has been seen in many parts of the country and as government authorities reassess their decisions to lift the restrictions in their jurisdictions, we are cautious as to what the remainder of the year may look like.”
Staff photo by Jake Daniels/Chattanooga Times Free Press – Nov 14, 2012 – Dan Frierson, CEO of the Dixie GroupIn the third quarter, sales of carpets, rugs and hard flooring surfaces in homes continued to recover from the impact of the COVID-19 pandemic. Sales of Dixie’s residential products were up 3% for the third quarter, which was about double the industry-wide gain of about 1.5% in the summer period.
But commercial flooring sales for Dixie were down 41% from a year ago, which the company said compares with an estimated 25% drop in overall commercial flooring sales in the industry as a whole.
“We believe the recovery will be longer coming and not as dynamic as the residential market recovery,” Frierson said.
Dixie Group is the second publicly traded carpet company to enjoy a jump in its stock price after reporting third-quarter results.
Mohawk Industries, the world’s biggest floorcovering manufacturer, last week reported better-than-expected third-quarter profits which were also up from a year ago. In response, Mohawk’s stock has increased for five consecutive days and closed Thursday up nearly 32% from a week ago when Mohawk’s latest quarterly earnings were announced.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.